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September 2015
Medicaid Fraud False Claims Act Sunset Review
Legislative Auditor’s Conclusion:
The Legislature should reauthorize the Medicaid Fraud False Claims Act because it allows the state to pursue additional fraud cases, and recoveries have increased
Mark Fleming, JLARC Staff
Preliminary Report:
Presentation Overview
Medicaid and investigations ofMedicaid fraud
Civil recoveries under Washington Medicaid Fraud False Claims Act
Civil actions brought by private individuals
Legislative Auditor recommendations
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5
4 Answering the sunset questions
Medicaid Fraud False Claims Act Sunset Review September 2015 2/21
Medicaid and investigations of Medicaid fraud1
Washington Medicaid is a $9.6 billion program (FY 2014) Program pays health care providers for services
to 1.75 million eligible low income Washingtonians
Federal government and states share costs Washington share is $4.0 billion
Medicaid fraud involves a health care provider knowingly submitting claims for payment to which the provider is not entitled
Medicaid Fraud False Claims Act Sunset Review September 2015 4/21
Three avenues to investigate potential Medicaid fraud Federal investigations: criminal and civil State criminal investigations State civil investigations
Authorized by Medicaid Fraud False Claims Act enacted in 2012
Authority expires in 2016 unless reauthorized by Legislature
Investigation, prosecution, and potential triple damages create disincentive for submitting false claims
Medicaid Fraud False Claims Act Sunset Review September 2015 5/21
Enhanced Recovery ends with
Sunset
Enhanced Recovery ends with
Sunset
Notification ends with
Sunset
Ends with Sunset
Medicaid Fraud False Claims Act Sunset Review September 2015 6/21
Washington’s False Claims Act allows Attorney General to investigate civil fraud AGO has investigated 29 in-state civil cases of
Medicaid fraud since 2012 Without the False Claims Act, AGO would lack
authority to pursue these cases
AGO receives early notification and may participate actively in federal civil cases involving Washington providers Provides opportunity to identify state interests
and maximize recoveries
Medicaid Fraud False Claims Act Sunset Review September 2015 7/21
Recoveries under Washington Medicaid Fraud False Claims Act
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Average annual fraud recoveries have increased
State Share
Federal Share
Average Annual Recoveries before Washington’s FCA
1/1/2009 – 6/6/2012 6/6/2012 – 5/3/2015
Average Annual Recoveries after Washington’s FCA
Total: $19.8 M
Total: $25.1 M
Mill
ions
of D
olla
rs$30m
$25m
$20m
$15m
$10m
$5m
$0m
$12.7m
$12.4m28% Increase
Medicaid Fraud False Claims Act Sunset Review September 2015 9/21
$10.0m
$9.8m
Recoveries from State-only civil cases since 2012 exceed state cost of investigations
$3M Federal
$2.85M State
$963,000
$292,800 Private filer
$2.96 Returned to Washington for each dollar spent on civil investigations
Recoveries since June 7, 2012Washington Investigation
Expenses$6.1M
Medicaid Fraud False Claims Act Sunset Review September 2015 10/21
$2.85M State
$292,800 Private filer
Civil actions brought by private individuals3
Private individuals may file civil actions under Washington’s False Claims Act Known as qui tam cases Private individuals are called “relators”
May receive a share of any recovery resulting from case
AGO has option to intervene and pursue case If AGO declines to intervene, relator may
continue to pursue case Provision mirrors federal FCA
Medicaid Fraud False Claims Act Sunset Review September 2015 12/21
Concerns about frivolous qui tam lawsuits
Provider representatives expressed concerns that qui tam provisions would significantly burden providers with frivolous lawsuits
JLARC staff requested examples from provider representatives None provided examples of costs incurred from
qui tam cases filed under Washington’s FCA
Medicaid Fraud False Claims Act Sunset Review September 2015 13/21
Seven qui tam cases filed since 2012None found by courts to be frivolous
AGO declined intervention
AGO decision pending
AGO settledRelator $292,800
$8,953
$3.65M
XX
Medicaid Fraud False Claims Act Sunset Review September 2015 14/21
If Washington eliminates qui tam
Qui tam is a central requirement for obtaining federal approval of a state FCA
In absence of state qui tam provision, Washington will lose: Additional 10 percent of recoveries obtained
through the state false claims statute, and Early notice of federal qui tam actions involving
state Medicaid providers when the case is filed Providers will continue to be subject to federal
qui tam actions
Medicaid Fraud False Claims Act Sunset Review September 2015 15/21
Answering the sunset questions4
Sunset Questions
Has use of the Medicaid Fraud False Claims Act complied with legislative intent?
Yes. AGO has investigated Medicaid fraud and increased annual recoveries since June 2012. AGO has complied with the procedural requirements established by the Legislature
Does the Act provide for efficient and economical fraud investigations, with adequate cost controls in place?
Yes. AGO uses case management software to monitor cases and meet filing deadlines. Recovered $2.96 for Washington’s Medicaid program for each state dollar expended
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Medicaid Fraud False Claims Act Sunset Review September 2015 17/21
Sunset Questions (cont)
Has the Act achieved expected performance goals and targets?
Yes. AGO has opened 29 in-state civil cases. Settlements in these cases account for $6.1 million in civil recoveries since 2012
To what extent does the Act duplicate the activities of another agency or the private sector?
None. The federal government, Washington Health Care Authority, and AGO complement rather than duplicate each other’s efforts
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Medicaid Fraud False Claims Act Sunset Review September 2015 18/21
Legislative Auditor recommendations5
Legislative Auditor Recommends
The Legislature should reauthorize the Medicaid Fraud False Claims Act because: The Act allows the state to pursue civil cases
against Medicaid fraud that it would lack authority to pursue otherwise; and
Medicaid fraud recoveries have increased since the Act was enacted in 2012
Medicaid Fraud False Claims Act Sunset Review September 2015 20/21
Next Steps and ContactsProposed Final Report December 2015
Mark Fleming, Project [email protected] 360-786-5181
Valerie Whitener, Project [email protected] 360-786-5191
www.jlarc.leg.wa.gov
